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Carbon Emission Reduction Policy in Australia: Lessons and Implications

Hoque, A. and Koku, P.S. (2014) Carbon Emission Reduction Policy in Australia: Lessons and Implications. Academy of Taiwan Business Management Review, 2 . pp. 25-33.


The political havoc caused by the carbon emission reduction policy in Australia started on 30 April when the opposition leader Kevin Rudd proposed Carbon Pollution Reduction Scheme (CPRS) and ended up on 24 February 2011 with the Julia Gillard Government announced the Clean Energy Bill (CEB). This study uses the event study technique to analyze carbon emitter's abnormal stock return as a "gauge" to discuss the advantages and disadvantages in implementing the CPRS and CEB policies in Australia. Since the electricity companies Santos and Origin are on the list of Australia's top 50 carbon emitters and hold the largest shares in Australian Stock Exchange, we used them as a sample of big carbon emitters in the study. The overall results indicate that the big carbon emitters do not support the CEB as they are heavily taxed under this policy for their carbon emission. They prefer CPRS policy which forces them to buy emission rights when they exceed their allocated quota. Furthermore, this policy assists them to reduce the carbon emission gradually by adopting better technology. These findings have two main implications: (1) carbon tax under CEB policy generates additional government revenue. (2) The CPRS facilitates carbon emission reduction in long-run.

Publication Type: Journal Article
Murdoch Affiliation: School of Management and Governance
Publisher: Taiwan Institute of Business Administration
Copyright: Taiwan Institute of Business Administration
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